Lord Hacking: My Lords, before the Minister sits down, I hope that she can help me. In response to comments that I and, I believe, other noble Lords made, she said more than once--this was most welcome--that it is the intention of the Government to monitor the scheme. She also said, helpfully, that if problems arise changes will be made. Can she help the House a little further? Can she make available the results of the monitoring so that we can see how the scheme is working and possibly make helpful suggestions to the Government?

Baroness Farrington of Ribbleton: My Lords, I am sure that the Government will welcome informed comment from all those with an interest in this scheme as part of the monitoring process. I hope that that will satisfy the noble Lord. If that is not the case, I shall write to him.

Lord Hacking: My Lords, will the results of the monitoring be made public? That is what I am anxious to obtain.

Baroness Farrington of Ribbleton: My Lords, I do not feel able to give a commitment because of the detail that may be contained in individual contracts that form part of the monitoring and the assessment. However, within reason and within those constraints, I am sure that it will be possible.

On Question, Motion agreed to.

Business Improvement Districts Bill [H.L.]

11.58 a.m.

Lord Jenkin of Roding: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.--(Lord Jenkin of Roding.)

On Question, Motion agreed to.

House in Committee accordingly.

[The CHAIRMAN OF COMMITTEES in the Chair.]

27 Feb 1998 : Column 886

Clause 1 [Business Improvement District (Election) Orders]:

Lord Jenkin of Roding moved Amendment No. 1:

Page 1, line 11, after ("authority") insert (", or in relation to which the authority is discharging the functions of another local authority as respects the establishment of a business improvement district").

The noble Lord said: I am aware that there is other business to follow this Committee stage that was put down after this Bill was scheduled to be heard today. At the same time I have to say that if there is to be any chance of this Bill reaching the statute book in this Session we need to examine it properly in this House because of the well-known, well understood problems that may exist in another place.

In moving Amendment No. 1, I think that it would be for the convenience of the Committee if I also speak to Amendment No. 28. The amendments go together. They are intended to deal with the situation where a local authority wishes to arrange to discharge its functions through another local authority. At Second Reading I gave the example of the Park Royal industrial estate where the boundaries of three local authorities impinge on that estate. It would be awkward if there had to be three separate procedures with three separate local authorities. It would add considerably to the complications of a business improvement district in those circumstances.

At present the Bill requires an area which is the subject of an election order to be wholly comprised within the area of the authority to which the application has been made. But it should be possible for authorities in those circumstances to make arrangements for one of the other authorities to discharge its functions with respect to the administration of the application so that where a bid area covers two or more authorities one authority would act on behalf of them all. There is no such provision in the Bill as drafted. Amendments Nos. 1 and 28 enable that to be done. I hope that it strikes the Committee as a sensible improvement. I beg to move.

Baroness Farrington of Ribbleton: Before commenting on the amendments, I hope that the Committee will be indulgent if I make comments about the Bill as a whole. The Bill before us today provides a useful opportunity to consider how local services are provided to ratepayers and how that service is funded and accounted for. In that respect, it is an important contribution to the wider debate now going on about the renewal of local government. We believe that the needs of local people are best served by locally elected councils. We want to establish a framework for a modern, relevant local government; one in which local councils lead their local communities and work in partnership with businesses, the voluntary sector and local people to deliver quality services and improve their areas.

The modernisation of local government will demand a radical programme of democratic renewal. It will challenge authorities to deliver services at best value. It

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will also require changes to the local government finance system to reflect the need for authorities to have greater local discretion and be more accountable to their communities.

Over the past six months, we have been discussing the finance issues with local government, with the representative business organisations and other interested parties. Nearly three weeks ago we published a consultation paper entitled Local Democracy and Community Leadership. Over the next month or so, we shall be publishing further consultation papers on the local government finance system, including a paper on the options for business rates.

The concerns which have prompted the noble Lord, Lord Jenkin of Roding, to bring forward this Bill are shared by the Government. We are addressing them in the series of consultation papers which we have issued, or are about to issue. Today's proceedings therefore are an important part of the debate about the future shape of local government. I shall listen with interest to the Committee's deliberations.

With the full consultation process that is being, and will be, undertaken on the financing of local government, it seems to be premature to be considering the implementation of a compulsory mechanism as provided for in the Bill. If the Bill makes progress, there are a number of detailed issues that the House would wish to consider--for example, how such a scheme would tie in with the non-domestic rating system under the 1988 Act, and what form of enforcement mechanism might be appropriate.

However, I recognise that the Bill provides a very useful opportunity to discuss the principles. I should like to raise two specific points of concern which noble Lords will wish to consider as background to the debate. First, the noble Lord, Lord Jenkin of Roding, said in his contribution to the Second Reading of the Bill that he had been advised that the money raised and spent by the BID company would not be treated as a tax and would not therefore be considered public expenditure.

This is an important point and the Committee will understand that I too have taken advice. It is clear that under the provisions of the Bill, businesses in an area will have to pay a certain amount if there has been a local vote to that effect. Although individual businesses will have the opportunity to vote, they will not have a choice on payment of the charge if the decision is taken to implement the draft scheme. As I am sure the Committee will recognise, this is exactly analogous to the taxation system in any democratic country. We can influence the level of income tax via the ballot, but there is no choice on whether or not to pay. This is, by definition, a tax and and spending of the income received would count as public expenditure. Section 2.68 of the European System of

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Accounts, used by the Office for National Statistics, makes it clear that expenditure of this type by BID companies would count as public expenditure. The Committee may well reflect on the Bill in the light of this advice.

I am also concerned about the issue of accountability. The Bill makes provision for the charging, on a compulsory basis, of all businesses within the BID area. This being the case, it would be important for all those businesses to have a clear idea of how their money is being spent and accounted for. I am sure that the noble Lord, Lord Jenkin, intends that this should be the case. However, it appears to me that the Bill as presently drafted does not provide any details on how the BID company will specifically account to the providers of its income. Where a local authority raises money and spends it, there is a framework of legislation and audit--it is not perfect, I am sure--which ensures financial probity and accountability to protect the interests of the ratepayers. There does not appear to be any provision made in the Bill for representation of the scheme chargepayers, and neither does there appear to be any supervision, reporting back or audit provision over and above what might be available through the Companies Acts to members of the company. Bearing in mind the compulsory nature of the contributions that would fund the company, the noble Lord, Lord Jenkin of Roding, might wish to consider whether such mechanisms might be appropriate.

I turn now to the amendment proposed by the noble Lord. This provides for an election order to be made in a situation where one local authority was discharging the functions of another local authority. This seems to be a worthwhile clarification of a potential scenario. If the Bill progresses, then noble Lords will wish to consider the detailed wording of the clause to ensure that it works as they would wish.

Amendment No. 28 makes a useful point. If a local authority wishes to arrange for the discharge of its functions as respects the establishment of a business improvement district by another local authority, then no doubt this should not be discouraged.

I apologise for the length of this intervention. It was felt that it would be helpful to place on record the Government's position.